The latest analysis reveals that the average worker has only seen a £3.80 increase in weekly earnings compared to a year ago. This marginal improvement has been overshadowed by a surge in living expenses, effectively nullifying any gains from wage increases, according to the Resolution Foundation.
The Office for National Statistics reported a rise in the UK’s jobless rate to 5.1% in October, marking the highest level since 2016 outside of the pandemic period. Concerns have been raised over a slowdown in hiring activity, potentially influenced by apprehension before the recent Budget and a national insurance hike impacting demand for labor.
Despite a slight decline in job vacancies, there are signs that businesses are preparing to recruit again. Although wage growth has decelerated, average paychecks are managing to keep pace with the rising cost of living, with real wage growth of just 0.5% in the three months leading to October, as stated by the ONS.
The Resolution Foundation highlighted that over the past year, real weekly earnings have only increased by £3.80, indicating a prolonged period of stagnant wages following the 2008 financial crisis. The organization noted that wage growth has been sluggish, particularly post-Brexit and during the pandemic, with forecasts suggesting minimal growth in wages up to 2031.
The ONS mentioned that wage growth, excluding inflation, slowed to 4.6% in the period up to October. The decrease in pay rises could prompt the Bank of England to consider interest rate cuts to bolster the economy. Moreover, a significant drop in the number of employees on payrolls during November signals further challenges in the job market.
Younger workers are facing challenges in securing employment opportunities, with a notable increase in unemployment among individuals aged 18 to 24. The ONS director highlighted a deteriorating labor market, characterized by reduced hiring activities, a decline in job opportunities, and an uptick in unemployment rates, particularly among the youth demographic.
TUC General Secretary emphasized the importance of stimulating demand to spur job market recovery, advocating for an interest rate cut by the Bank of England to support economic growth and consumer spending. Addressing the ongoing economic repercussions on the labor market, he stressed the necessity of providing adequate assistance to individuals seeking employment opportunities.